Yvette Cooper, the Work and Pensions Secretary, will warn Cabinet colleagues that the progress Labour has made in tackling youth unemployment could be reversed without a drive to help 18 to 24-year-olds get a foot on the jobs ladder.

Ms Cooper’s officials have advised her that the widely predicted “white-collar recession” has not materialised. Instead, alarm bells are ringing about a sharp rise in youth unemployment.

In the past year, the jobless rate among 18 to 24-year-olds has risen from 11.9 per cent to 17.3 per cent, with more than 900,000 now estimated to be out of work. The crisis is about to deepen as school-leavers and graduates start to look for jobs. The issue will top the agenda when the Cabinet meets in Cardiff on Thursday. Ministers are expected to approve a package of measures including:

*prioritising the young jobless when a £1bn “future jobs fund” to create 150,000 jobs is shared out this month;

*new advice for parents worried about their children’s jobs prospects, especially when they leave school;

*more internships for graduates, on top of the 5,000 already announced;

*expanding the 100,000 apprenticeships on offer.

Ministers have not yet committed new money, but may switch “underspends” from other budgets. They will hold talks with business leaders to urge them to open as many opportunities to young people as possible ? even if these are initially unpaid or low-wage posts.

Ms Cooper is worried that those who struggle to find work after leaving school or university may become long-term unemployed because they do not acquire the work habit. “We virtually eradicated youth unemployment after 1997,” one government source told The Independent yesterday. “We cannot afford to slip back and lose a generation who are left on the scrapheap.

“We are doing a lot, but we can and should do more collectively, and that will be the focus of announcements over the next few weeks.”

The source added: “Yvette wants to make sure everything possible is being done to keep young people motivated and given every chance to reach their potential in these tough times. This is about helping every young person ? this recession is hitting everyone, the lower-skilled school leaver and the graduate looking for work in a tough market.” The other ministers involved will be Ed Balls, the Schools Secretary, who is married to Ms Cooper, and the Business Secretary, Lord Mandelson.

At the peak of the 1980s recession, there were over 1 million young people on the dole. At present, 461,000 people between the ages of 18 and 24 claim Jobseeker’s Allowance (JSA).

In the 1980s, 600,000 young people were on the dole for over six months; in the 1990s recession this figure was 415,000. There are currently over 75,000 young people who have claimed for more than six months. Professional people accounted for only 18 per cent of those coming onto JSA last month.